1 Thing About the Fitbit Blaze Investors Should Love

In January, the wearables giantannounced its first smartwatch.Unfortunatelyfor shareholders, the market was not impressed, and Fitbit shares crashed following the Blaze's unveiling. Although Fitbit is profitable and the largest seller of wearables in the world, investors have long worried that Fitbit's business would eventually be subsumed by a plethora of ever-more powerful smartwatches, including, most notably, the Apple Watch.

The Blaze is indisputably Fitbit's answer, but at the same time, it's simply more of the same. The Fitbit Blaze is definitely the most stylish of Fitbit's trackers, but the features it offers are largely on par with many of its other devices, mostly centered around tracking activity and sleep. Like the Apple Watch, the Blaze tells the time and displays text messages, but unlike the Apple Watch, it can't run third-party apps.

The Blaze enjoyed mostly positive reviews and was favorably received by consumers, becoming the best-selling smartwatch on Amazon. Although it may lack the more powerful features of the Apple Watch, it has better battery life and more advanced fitness tracking. It's also $100 cheaper.Fitbit sold over one million Blazes in the first quarter, helping the company maintain its leadershippositionin the wearables market, according to IDC. In total, Apple shipped 1.5 million Apple Watches over the same period of time.

Attracting repeat buyers

But theidentityof its users is arguably more important than its sheer popularity. Some 600,000 of those Blaze buyers were new to Fitbit's ecosystem, which is welcome news for the rapidly growing company, but even more exciting was the fact that 400,000 Blaze buyers had previously owned another Fitbit tracker. This strengthens the bull case for three reasons:

Fitbit derives substantially all of its revenue from selling trackers. The company can continue to grow its base of customers, but eventually it will need to add repeat buyers. With the Blaze, Fitbit appears to be triggering an upgrade cycle.

Investors have long worried about customer fatigue. Eventually, some users get sick of Fitbit's trackers and stop wearing them. The Blaze's strong reception with existing Fitbit owners suggests the company has plenty of dedicated fans.

The Blaze is Fitbit's second most expensive model behind only the Surge. Fitbit has been trying to move upmarketto boost the average selling prices of its trackers. Almost all repeat buyers previously owned less-expensive models.

The same was largely true for Fitbit's other new model, the Alta, which also attracted 40% repeat buyers. The Alta is much less expensive, at about $130, and is definitely not a smartwatch, but it's more evidence that Fitbit is building a base of loyal, returning customers.

Competition is intense, but Fitbit remains dominant in its segment

Overall, it's been a difficult year for Fitbitinvestors. Shares of the wearables giant have fallen more than 50% year-to-date, as a series of poor announcements and disappointingearnings have sent shares tumbling. Earlier this month, Fitbit shares lost about one-quarter of their value following the company's first quarter earnings report.

Fitbit's share of the total wearables market fell to 24.5% in the first-quarter, down from 32.6% in the first quarter of 2015. Some of that loss may have been attributable to Apple: The Cupertino tech giant snagged 7.5% of the market from absolutely nothing in the same quarter last year (the Apple Watch had yet to make its debut).

Apple isn't going away. The company is likely to improve the Apple Watch in the coming years with a steady stream of upgrades. The same will be true for its competitors, but the Blaze is clearly a success and a testament to the appeal of Fitbit products.

Sam Mattera has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Amazon.com and Apple. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.